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Jim Ryan, co-chief of Bwin.party digital entertainment

Jim Ryan, the co-chief executive of Bwin.party digital entertainment, spent three of the past five weeks in the U.S. peddling a presentation that advertised to investors the strengths of the world’s largest publicly-traded online gambling company. Ryan’s presentation included a one-page chart that listed the top online poker brands in the U.S. market and made a stark point about brand awareness: The names of PokerStars and Full Tilt Poker, until recently the favorite destinations of U.S. online poker players, were crossed out in red.

“Where you see the red lines, those organizations have been indicted, so although one can’t predict the future, it’s unlikely you will see those brands back in the U.S.,” Ryan said during an interview. “The brand that has the most consumer awareness is in fact the PartyPoker brand.”

Although individuals associated with PokerStars and Full Tilt have been criminally charged, the companies themselves have not been indicted. Ryan’s company, however, does indeed own both PartyPoker and the World Poker Tour, two of the top online poker brands that did not have their U.S. operations shut down by the U.S. Justice Department in April because they were not facilitating for-money online poker play in America—in the case of PartyPoker since 2006. But the fact that Ryan, who is based in Gibraltar, has recently been spending so much time in the U.S. shows he is hoping for a U.S. comeback. “My focus is on the U.S.,” says Ryan, who is in the final stages of negotiating partnerships with two U.S. companies. “Even though there is no guarantee that online gaming will ever regulate in the U.S.”

For years Ryan and his staff at PartyGaming, which merged with Bwin earlier this year, had to sit on the sidelines, peering across the Atlantic Ocean at the boatloads of money PokerStars and Full Tilt Poker were making in the U.S. online poker market. It was a difficult spectacle to watch for the folks at PartyGaming, which was the biggest online gambling company in the world thanks to its domination of the U.S. online poker market until Congress passed the Unlawful Internet Gambling Enforcement Act in 2006. PartyGaming exited the U.S. market and saw its stock price plummet, while PokerStars and Full Tilt kept their U.S. facing sites going and used the so-called liquidity from the U.S. market to expand globally at PartyGaming’s expense. "We were beyond the point of frustration," says Ryan.

Things only seemed to get worse for ParyGaming, which struck a non-prosecution agreement with the U.S. Attorney in Manhattan, paying $105 million and admitting its U.S. operations had for years violated U.S. law. Meanwhile, PokerStars and Full Tilt continued to operate in the U.S. and claimed that their U.S. operations did not violate U.S. law, pointing to legal opinions the companies had received from big shot U.S. lawyers. To some, it seemed like PartyGaming had simply given a lucrative business away. Even at the company’s headquarters there were doubts until April 2011, when federal prosecutors in Manhattan shut down the U.S. operations of PokerStars and Full Tilt, calling them illegal gambling businesses, and indicted some of their key executives. “I think Party has been vindicated now in getting out when they did and in dealing with the Department of Justice,” says Behnam Dayanim, a partner at Axinn Veltrop & Harkrider, who negotiated PartyGaming’s agreement with federal prosecutors in Manhattan.

Still, Bwin.party is far from reclaiming online poker’s crown. Operating in highly-regulated and taxed European markets while competing against well-run companies like PokerStars is tough. Bwin.party’s stock, which trades on the London Stock Exchange, has tumbled by 50% in 2011. Big corporate mergers are never easy, but the company has also suffered a defeat in Germany, where the nation’s top civil court recently decided to uphold an online gambling ban, and been slammed by higher gaming duties across Europe. When the company tried to take advantage of the April U.S. shutdown of PokerStars and Full Tilt, Bwin.party found that while some new European players were attracted to its poker brands, revenues remained flat. It wasn’t until Full Tilt’s European regulator suspended Full Tilt’s license in late June that Bwin.party’s increased advertising and promotional expenditures started to pay off. PartyPoker is now the second-biggest online poker room, according to PokerScout.com, averaging 4,150 cash players during any given time. PokerStars has 22,800.

Ryan, who joined PartyGaming as CEO in 2008, has been waiting for this moment. He long ago took Bwin’s Norbert Teufelberger to a McDonald’s in La Linea, Spain, and talked to him about the logic of combining Bwin’s strong online sportsbook business with PartyGaming’s poker brands, resulting in the merger that was first announced in 2010. Ryan also fine-tuned his company’s business-to-business capabilities over the last few years with an eye toward finding a U.S. partner with whom he can re-conquer America. “We had to be realistic about where we sat in the food chain,” says Ryan. “We figured if the U.S. regulated it would be unlikely that we would secure a license directly, that the laws of the land would be written to allow existing land operators and equipment manufacturers in the U.S. to secure the licenses.” Ryan is optimistic about current efforts in Washington, driven by the American Gaming Association and powerful casino companies like Caesars Entertainment and MGM Resorts, to potentially get some sort of online gambling legislation through a divided Congress. But Ryan says he is also preparing for the possibility that online poker gets regulated first on a state-by-state basis.

“We have to be ready for both federal or state,” he says. “It feels good to have American taxpaying companies finally driving this.”